Opinion 93-17

This
opinion represents the views of the Office of the State
Comptroller at the time it was rendered. The opinion may no
longer represent those views if, among other things, there have
been subsequent court cases or statutory amendments that bear on
the issues discussed in the opinion.

LOCAL FINANCE LAW, §§11.00(a)(85), 37.00(a)(3); RETIREMENT AND
SOCIAL SECURITY LAW, §§17, 17-a; EDUCATION LAW, §521(2): The
issuance of bonds by a non-city school district is subject to a
mandatory referendum when the bonds would be issued to finance
the pre-payment of those contributions to the State Retirement
Systems that would otherwise be amortized and paid to the
Systems in annual installments. A participating employer may
issue bonds to finance the pre-payment of such contributions
after the employer has recorded the amount as a "current
liability".

You ask whether the issuance of bonds by a non-city school
district is subject to referendum when the bonds would be
issued to finance the pre-payment of amounts due the State
Employees' Retirement System and the State Teachers' Retirement
System, respectively, pursuant to chapter 62 of the Laws of
1989 and chapter 175 of the Laws of 1990. You also ask whether
a participating employer may issue bonds to finance the pre-payment of such amounts after the employer has recorded the
amounts as a "current liability".

Chapter 62 of the Laws of 1989 amended section 17 of the
Retirement and Social Security Law, and added a new section 17-a to that law, for the purpose of eliminating a lag in
retirement contributions by participating employers in the
State Employees' Retirement System. Chapter 175 of the Laws of
1990 made analogous amendments to Education Law, §521(2) in
connection with employer contributions to the State Teachers'
Retirement System (see Board of Education of West Islip Union
Free School District, et al. v New York State Teachers'
Retirement System, et al., Supreme Court, Albany Co., RJI No.
019028049, May 26, 1992). In essence, these provisions permit
employer contributions to the Retirement Systems for certain
fiscal years to be amortized and paid to the Systems, with
interest, in annual installments over a prescribed number of
years. These provisions also provide employers with the
continuing option of pre-paying the contributions (id.) and,
subject to certain restrictions,authorize employers to issue
debt for the purpose of financing the pre-payment (see Local
Finance Law, §§10.00[a], 11.00[a][85]).

Local Finance Law, §37.00(a) generally provides that, with
certain exceptions, the finance board of a non-city school
district may not adopt a bond resolution unless a tax to be
collected in installments has been voted for the object or
purpose for which the resolution authorizes the issuance of
obligations. In this instance, the only exception to the
referendum requirement that might be relevant is the one set
forth in section 37.00(a)(3) which is applicable in the case
of:

[a] bond resolution or capital note resolution
which authorizes the issuance of bonds or capital
notes for the payment of judgments, or compromised or
settled claims against such a school district, or
awards or sums payable by such a school district pursuant to
a determination by a court, or an officer,
body or agency acting in an administrative or
quasi-judicial capacity.

Since the contributions to be amortized and paid to the
Retirement Systems are not "judgments", "compromised or settled
claims" or "awards", the exception to the mandatory referendum
requirement is applicable only if the amounts needed to pre-pay
the contributions are "sums" payable pursuant to an
administrative or quasi-judicial determination.

It is well established that, in the absence of a clear
expression of legislative intent to the contrary, when a
general term in a statute is preceded by specific phrases which
are all of the same nature, the general term must be limited to
matters within that class (see, e.g., Schmitt v Review
Committee, 179 AD2d 959, 579 NYS2d 217; Lawrence v Town of East
Fishkill, 167 AD2d 447, 562 NYS2d 130; Barsh v Town of Union,
126 AD2d 447, 513 NYS2d 875). The terms "judgments",
"compromised or settled claims" and "awards" precede the term
"sums" in section 37.00(a)(3) and all connote to varying
degrees an involuntary payment made to resolve a controversy
involving a school district and another party. In this
instance, however, the pre-payment of the contributions is
authorized by statute and completely voluntary (see Board of
Education of West Islip Union Free School District, supra) and
is not in any way related to the resolution of a controversy.

Moreover, in language similar to that used in section
37.00(a)(3), Local Finance Law, §11.00(a)(33) establishes a
period of probable usefulness for, interalia, "sums" payable
by a school district pursuant to an administration or quasi-judicial determination. Section 11.00(a)(33), however, pre-dates the enactment of chapter 62 of the Laws of 1989 and
chapter 175 of the Laws of 1990 which, respectively, added and
amended section 11.00(a)(85) to provide a specific period of
probable usefulness for "[p]ayment of the amortized amounts
outstanding pursuant to section seventeen-a . . . of the
retirement and social security law and section five hundred
twenty-one of the education law . . .". Thus, the addition
and amendment of section 11.00(a)(85) suggests that the
Legislature did not consider the amounts needed to pre-pay the
contributions to the Retirement Systems to be "sums" payable
pursuant to an administrative or quasi-judicial determination
within the meaning of section 11.00(a)(33).

Accordingly, in our opinion, the amounts needed to pre-pay
the contributions to the Retirement Systems are not "sums"
payable pursuant to an administrative or quasi-judicial
determination within the meaning of section 37.00(a)(3).
Therefore, it is also our opinion the issuance of bonds by a
non-city school district to finance pre-payment of the
contributions is subject to a mandatory referendum.

With respect to issuing bonds to finance pre-payment of the
contributions after recording the total amount thereof as a
"current liability", your staff has advised us that, in this
instance, recording the contributions as a current liability
required an appropriation financed from available fund balance.
Also, under generally accepted accounting principles as
prescribed by this Office for most local governments (see
General Municipal Law. §36), the full amount of the
appropriation is considered "expended" when the current
liability is recorded, even though no portion of the
contributions has actually been paid.

Although not specifically raised in your inquiry, we note
that the appropriation for the payment of the contributions
would not lapse at the end of the fiscal year in which the
appropriation is made. As a rule, an appropriation for a
purpose other than a "capital project" lapses at the close of
the fiscal year for which made to the extent that the
appropriation has not been "expended", or "obligated" or
"encumbered" (see County Law, §368; Town Law, §111; Village
Law, §5-522). In this instance, even if the full amount of the
appropriation is not "expended" within the meaning of the
statutory term (cf. People v Kane, 43 App Div 472, 61 NYS 195
[ordinary signification of "expenditure" is "payment"]), we
believe the appropriation is fully "obligated" or "encumbered"
because the contributions are unpaid obligations chargeable
against the full amount of the appropriation (cf. Town Law,
§110; see also County of Ontario v Faculty Association of
Community College of Finger Lakes, 57 AD2d 189, 392 NYS2d 111;
1968 Opns St Comp No. 68-77, unreported).

As to the authority to issue obligations, in 1981 Opns St
Comp No. 81-122, p 124, we concluded that when a municipality
has paid current funds to finance unanticipated capital
expenditures which results in a shortage of funds needed to pay
operating expenses, the municipality may not subsequently issue
bonds to finance the same capital expenditures. We reached
this conclusion because instead of being used to finance
capital expenditures, the bond proceeds would be used to
finance operating expenses and there is no authority to issue
bonds to finance operating expenses (cf. Local Finance Law,
§§10.00, 11.00; Hurd v City of Buffalo, 41 AD2d 402, 343 NYS2d
950, affd 34 NY2d 628, 355 NYS2d 369).

In this instance, however, although the appropriation to
pre-pay the contributions has already been financed from fund
balance, no moneys have actually been paid to the Retirement
Systems. Thus, unlike the situation in Opn No. 81-122, supra,
the bond proceeds would be used to finance the pre-payment of
the contributions and not to finance operating expenses.

Moreover, we have previously concluded that when current
funds have been appropriated to pay debt service and there are
surplus bond proceeds which are also available to pay the debt
service, the surplus bond proceeds may be used to make the
payment (1988 Opns St Comp No. 88-7, p 11). We reached this
conclusion, in part, because there are no constitutional or
statutory provisions which require an appropriation of current
funds for debt service to be used for that purpose when surplus
bond proceeds are available to pay debt service. Similarly, in
this instance, we are aware of no statutory prohibition against
changing the source of funding for an appropriation to pre-pay
the contributions.

Accordingly, it is our opinion that a participating
employer may authorize the issuance of bonds to finance the
pre-payment of the contributions due the Retirement Systems at
any time prior to the actual payment of the contributions.